Universities have begun selling bonds again, as schools and investors alike bet on a resurgence of on-campus life.
After a year of declining enrollment, online classes and vacant quads, schools have started selling bonds again for new dormitories, signaling optimism that the impact of the pandemic will be short-lived. Tufts University, a private school near Boston, took on $250 million of debt to build a new residence hall to allow more students to live on campus. Stockton University raised money to build apartmentss for its Atlantic City campus. Even a company that has seen several of its dorm projects fall into financial distress during the pandemic was easily able to sell bonds to build another at a college in Boca Raton, Florida.
They are joining other industries upended by Covid-19 — like airports and convention centers — that are seizing on low interest rates and investors’ confidence in the economic recovery to refinance debt or borrow for new projects. Investors have been anticipating a comeback even for schools struggling before the pandemic: Junk-rated education debt has returned more than 5%, some of the municipal market’s biggest gains.
“The higher-education sector has been far more resilient than people had thought back when the pandemic first broke in March and April,” said Eric Friedland, director of municipal research for Lord Abbett, which has been buying higher-education bonds.